The U.S. Justice Department ruled that hardships resulting from damages incurred during Hurricane Harvey, Hurricane Irma, and other natural disasters should be taken into account in future bankruptcy filings. So, how can extreme weather impact your bankruptcy filings?
Families and small business owners are more likely to struggle with their financial obligations after natural disasters. This is common sense, and a recent study by Professor Elizabeth Warren of Harvard University agrees. The study shows that the rate of growth in bankruptcy filings following the biggest hurricanes of the past 25 years is about 50% higher in states that have suffered a direct hit and about 20% higher in nearby states. Financial obligations for paying off mortgages and loans do not disappear when the home is destroyed or the vehicle lost. Insurance policies may not offer relief. These policies often cover wind damage, but not damage caused by flooding. In these cases a separate policy is often required to provide coverage. It should come as no surprise that, for many, this can lead to financial ruin.
How Can Filing For Bankruptcy Help?
The memorandum sent out by the justice department asks prosecutors to exercise discretion when deciding to prosecute or not to prosecute those devastated by natural disasters. The guidelines set forth in the memorandum provide approval with respect to any reasonable requests for filing or producing bankruptcy documents due to a natural disaster. Bankruptcy, of course, offers a fresh start to those in over their heads. Various forms of bankruptcy are available, which are meant to allow the applicant to find the right type of relief for his or her situation. For some, discharge of all assets and a clean slate is best. This is generally available through a Chapter 7 bankruptcy. Others prefer to seek more manageable payment options, putting together a repayment plan that spans three to five years. Small-to-medium sized businesses are also eligible to apply for bankruptcy relief. A business could move forward with a Chapter 7 to liquidate assets or a Chapter 11 to reorganize.
The memorandum/guidelines also provide that costs associated with the emergency home repairs that may become necessary after a natural disaster are to be designated “special circumstances and therefore allowed.
How To Get Back On Your Feet
A successful petition for relief from debt through bankruptcy can help an individual or business rebuild after suffering financial ruin due to damage from a hurricane. However, determining the best type of bankruptcy for your situation can be difficult. There are five unique types of bankruptcy, according to the United States Bankruptcy Code. Two are personal, two are commercial, and one, Chapter 9, is for state and local government-run organizations.
Determining the best type of bankruptcy for your particular situation can be tough. So, if you are considering filing for bankruptcy and are confused or need help it’s time to contact the largest consumer bankruptcy filing firm in Florida. We are here to make sure you’re properly educated about bankruptcy and to help you build a strong financial foundation. Call the Law Offices of Patrick L. Cordero for a free consultation today at (305) 445-4855.